New trade deal with Canada, Mexico borrows heavily from pact that Trump abandoned

President Donald Trump, at a news conference in the White House Rose Garden, announces that Canada will join the U.S. and Mexico in a new trade deal that will replace the North American Free Trade Agreement.(Photo: WHITE HOUSE)

WASHINGTON – President Donald Trump was in a celebratory mood when he announced on Monday that Canada would join the U.S. and Mexico in a new trade agreement that he hailed as the most important trade deal “in the history of our country.”

But many parts of the new deal weren’t new at all. They were lifted directly from a previous trade pact that Trump had labeled a disaster and abandoned on his third day in office.

“From a branding and a political perspective, he has put a new wrapper on it and a new bow,” said Bruce Heyman, former U.S. ambassador to Canada.

But while the packaging may be different, roughly two-thirds of the United States-Mexico-Canada Agreement, or USMCA, can be traced back to language in the now-discarded Trans-Pacific Partnership, a trade deal negotiated by Trump’s predecessor, Barack Obama, according to Heyman and other analysts.

Parts of the new trade agreement that appear to have been carried over from the Trans-Pacific Partnership, or TPP, include provisions dealing with digital and intellectual property, patent protections, employment standards, environmental rules and currency manipulation, analysts said.

“There’s more TPP in (the new trade deal) than not,” said Jared Bernstein, who served as chief economist and economic adviser to former Vice President Joe Biden.

At the same time, “there are enough significant differences that I wouldn’t call it a rubber stamp,” said Bernstein, who now serves as senior fellow with the Center on Budget and Policy Priorities, a progressive think tank based in Washington.

U.S. Trade Representative Robert Lighthizer acknowledged Monday that, in negotiating the new deal with Canada and Mexico, the Trump administration had built on the previous work done on the Trans-Pacific Partnership.

But, “our agreement is substantially better than the TPP,” Lighthizer said, arguing that the new pact makes improvements in a number of new areas, such as automobile rules of origin and access to Canada’s dairy markets.

The Trans-Pacific Partnership was a comprehensive, 12-country trade agreement that Obama signed in 2016 after seven years of negotiation. The pact was designed to boost exports, remove tariffs and non-tariff barriers, open access to more markets and usher in transparency in trade rules.

Besides the U.S., other countries in the agreement included Australia, Canada, Japan, Malaysia, Mexico, Peru, Vietnam, Chile, Brunei, Singapore and New Zealand – all representing roughly 40 percent of the value of goods and services produced worldwide.

China was excluded from the deal because the participating countries hoped that banding together would give them leverage to pressure Beijing to reform its trade practices.

But the agreement was never approved by the U.S. Senate. Trump, who as a presidential candidate had blasted the pact as a bad deal, signed an order on his third day in office pulling the U.S. out of the accord.

Trump also set in motion negotiations to update the North American Free Trade Agreement, a nearly quarter-century-old accord that essentially eliminated tariffs on most goods traded among the U.S., Canada and Mexico. Those talks resulted in the new agreement that will replace NAFTA.

Heyman said he and others who worked on the Trans-Pacific Partnership were glad to see that many of its provisions were carried over into the new trade agreement with Canada and Mexico.

Some provisions were adjusted slightly when included in the new trade agreement.

For example, under the new pact, Canada will ease restrictions on its dairy market and allow American farmers to export about $560 million worth of dairy products to their northern neighbor. That’s about 3.5 percent of Canada’s total $16 billion dairy industry. The Trans-Pacific Partnership would have given American farmers access to roughly 3.25 percent of Canada’s dairy industry.

Some parts of the new agreement were not in the TPP. Among them are provisions dictating the percentage of an automobile that must be built from parts made in North America and mandating that that up to 45 percent of an auto must be made by workers earning at least $16 an hour.

In carrying over provisions from the TPP into the new agreement, the Trump administration may have been looking to further strengthen the U.S.’s ability to deal with some of its ongoing trade issues with China, said Laura Dawson, director of the Canada Institute at the Woodrow Wilson International Center for Scholars.

Whatever the reason, “it doesn’t make sense for Trump to claim that NAFTA and TPP were a disaster but (the new deal) is a miracle,” Bernstein said. “They are far too similar to make that credible.”